White House Uncovers $112 Billion in Lost Revenue: China Exploits Loopholes, Threatens U.S. Security
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The administration reports massive tariff evasion schemes, mainly orchestrated by China, costing the U.S. billions. New rules aim to crack down on foreign importers and protect American interests.
The White House on Tuesday released a report detailing a staggering $112 billion gap between shipments reported by China’s customs agency and those recorded by the U.S. Census Bureau. This discrepancy is a clear sign of rampant tariff evasion through transshipment, with China at the center of these schemes. The administration estimates that this practice costs the United States between $19 billion and $26 billion in annual tax revenue—money that should be supporting American workers and national security, not lining the pockets of foreign adversaries.
The Office of Trade and Manufacturing Policy revealed that these schemes have only grown under the current administration, which has rightly maintained high import duties on Chinese goods to protect American industries. The report states, 'While the future may be murky, the past is not,' emphasizing that previous weak trade policies opened the door for this kind of fraud and abuse by foreign actors.
Industry leaders, including Ryan Petersen of Flexport, acknowledge that higher tariffs have created incentives for importers to misdeclare values, classifications, or country of origin. Carrie Owens, a former Customs and Border Protection enforcement chief, noted that higher tariffs have exposed the extent of the problem, but also highlighted the need for tougher enforcement and stricter border controls.
The report also exposes how the U.S. system, by allowing foreign 'importers of record'—often shell companies—to file customs entries, has made it easier for foreign entities to evade American law. In response, the administration issued an executive order on June 3 to limit the use of continuous customs bonds by foreign entities and require more detailed documentation. Customs officials are now deploying advanced artificial intelligence tools to scrutinize shipment data and catch cheaters.
Owens expects these new measures to start delivering results by October, but warns that if evasion continues, even higher tariffs may be necessary to defend American interests. 'If everybody paid the tariffs they’re supposed to, I personally don’t think the tariffs will be as high as they currently are,' she said—making clear that the U.S. must remain vigilant against foreign exploitation and protect its economic sovereignty.